Jess Smith, III: On the other hand, I had a woman come in to see me recently and she hardly has any income, but her name is on the deed of an ex-boyfriend’s piece of lien-free real estate that is worth ,000.
Therefore, she had to pay 100% of her debts to protect that property.
She said, “Well, I better go out and find a job first.” She was behind on her residence and thought she could get rid of her other debt and just keep her residence, but she found out her name is on this other piece of property.
CH: Sometimes people come to us, creditors are hounding them, and they don’t have the ability to pay them back.
If your existing mortgage balance is less than the home’s new value, you receive the difference -- your equity -- in cash at closing.
Your new mortgage replaces your old one, you lose all the equity in your home and you begin paying interest on the full loan balance.
This concept, known as equity, means that you own a portion of your home long before you pay off your mortgage, and you can use that equity in different ways.
In a cash-out refinance, which is sometimes known as a remortgage, you take out a new mortgage based on your home’s present value.
You can only protect ,300, which leaves just under ,700 of non-exempt equity.
If those individuals don’t have any real estate or they have less than ,250 in tangible personal property, there’s nothing a creditor can take from them to liquidate, to pay on the debt.
Sometimes I tell people that they don’t even need me, if they have a strong enough stomach to withstand the calls, the letters, and being dragged into court periodically.
Wilhelm Schnotz has worked as a freelance writer since 1998, covering arts and entertainment, culture and financial stories for a variety of consumer publications.
His work has appeared in dozens of print titles, including "TV Guide" and "The Dallas Observer." Schnotz holds a Bachelor of Arts in journalism from Colorado State University.